Co-opted by Reform

To move past the great debate over a government takeover of the U.S. health care system, Senator Max Baucus offered a reform plan today that sets up nonprofit co-ops to compete with private insurers.

The question is: Why?

The idea, championed by Baucus' Democratic colleague Kent Conrad of North Dakota, evolved from existing co-ops like Group Health Cooperative in Seattle.

Group Health customers still see premium increases much like their counterparts in private insurance plans. It hasn't significantly changed the market for other insurers in the state of Washington. And the number of uninsured people in Washington jumped 21 percent last year and will rise significantly this year, the state's insurance commissioner says.

It's a challenging time for insurers in large part due to the economy, says Group Health spokesman Michael Foley.

He says his co-op doesn't claim to be the lowest-cost model or guarantee that customers' premiums won't rise (about 40 percent of the insurer's business is large employers). And Foley says Group Health isn't touting its plan as the answer for covering the 46 million uninsured Americans that Baucus' bill intends to help.

"We wouldn't make a straightforward statement that precisely what we are is a plan that can be applied to a national model," he says. "We do strongly believe we are a model for the way health care should be provided."

What Group Health espouses is reducing costs in the system—like paying doctors salaries instead of fees for every service they provide—and reinvesting that money into new programs and technology.

While that level of detail isn't included in Baucus' $856 billion health reform plan, it seems clear that the primary impetus for the co-op idea is simply that it's not the public option. In other words, it's an idea that can move out of the Senate Finance Committee that the Montana Democrat chairs even if it doesn't meet the goals of President Obama's overall reform effort.

"This is a unique moment in history where we can finally reach an objective so many of us have sought for so long," the Associated Press quotes Baucus saying. "The Finance Committee has carefully worked through the details of health care reform to ensure this package works for patients, for health care providers, and for our economy."